Question:
I am a salesperson at a fashion store in Hanoi, working under a 12-month definite-term labor contract. After 6 months, the company suddenly terminated me without prior notice, citing "staff reduction due to business difficulties." However, they did not pay my last month's salary or provide unemployment support, despite me not violating any disciplinary rules. I would like to know if this sudden termination is lawful?
Answer:
The termination without prior notice and non-compliance with procedures violates the regulations under the 2019 Labor Code, and the employer may be required to fulfill responsibilities as stipulated in Articles 41 and 42 of the 2019 Labor Code:
“Article 41. Obligations of the Employer in Case of Unlawful Unilateral Termination of a Labor Contract
The employer must reinstate the employee to work under the concluded labor contract; must pay wages, contribute to social insurance, health insurance, and unemployment insurance for the days the employee was not allowed to work, and must additionally pay the employee an amount equivalent to at least two months' salary under the labor contract.
After being reinstated, the employee must return to the employer any severance pay or job loss allowance received from the employer.
In case there is no longer a position or job as stipulated in the labor contract and the employee still wishes to work, both parties shall negotiate to amend or supplement the labor contract.
In case of violation of the notice period stipulated in Clause 2, Article 36 of this Code, the employer must pay an amount equivalent to the salary under the labor contract for the days without notice.
2.If the employee does not wish to continue working, in addition to the amount payable under Clause 1 of this Article, the employer must pay severance allowance as stipulated in Article 46 of this Code to terminate the labor contract.
3.If the employer does not wish to reinstate the employee and the employee agrees, in addition to the amount the employer must pay under Clause 1 of this Article and the severance allowance as stipulated in Article 46 of this Code, both parties shall agree on an additional compensation amount for the employee, which must be at least equivalent to two months' salary under the labor contract to terminate the labor contract.”
“Article 42. Obligations of the Employer in Cases of Structural, Technological Changes, or Economic Reasons
The following cases are considered structural or technological changes:
a) Changes in organizational structure or labor reorganization;
b) Changes in processes, technology, machinery, or equipment related to the employer’s production or business sector;
c) Changes in products or product structure.
2. The following cases are considered economic reasons:
a) Economic crisis or recession;
b) Implementation of state policies or laws during economic restructuring or fulfillment of international commitments.
3.In cases where structural or technological changes affect the employment of many employees, the employer must develop and implement a labor utilization plan as stipulated in Article 44 of this Code; if there are new job positions, priority must be given to retraining employees for continued employment.”
4.In cases where economic reasons pose a risk of job loss for many employees, leading to termination, the employer must develop and implement a labor utilization plan as stipulated in Article 44 of this Code.
5.In cases where the employer cannot resolve employment issues and must terminate employees, severance allowance must be paid as stipulated in Article 47 of this Code.
6.Termination of employees under the provisions of this Article may only be carried out after consulting the employee representative organization at the workplace where the employee is a member and notifying the provincial People’s Committee and the employee at least 30 days in advance.”
In your case, the company failed to fulfill its obligations when terminating you for economic reasons as stipulated in Article 42 of the 2019 Labor Code. Therefore, the company may be held liable as outlined in Article 41 of this Code due to the unlawful unilateral termination of the labor contract.
Consultation: Labor Law Services
